17.7.17

It’s Premature for OPEC to Cap Libya, Nigeria Oil Output – Kuwait

The market is on a recovery track due to rising global demand,
Kuwait’s Organisation of the Petroleum Exporting CountriesGovernor
Haitham Al-Ghais told Reuters.
In an effort to eradicate a supply glut, the OPEC is curbing output
by 1.2 million barrels per day (bpd) until March 2018, while Russia and
other non-OPEC producers are cutting half as much.
But oil prices have fallen more than 15 percent this year due to
still-booming supplies and stubbornly high global stocks, which remain
way above OPEC targets despite the cut agreement.
A ministerial committee from OPEC and non-OPEC countries, which is
headed by Gulf OPEC member Kuwait, meets in Russia on July 24 to discuss
compliance with the cuts, from which Nigeria and Libya are exempted due
to years of output-sapping unrest.
“All this talk about putting a production cap on Libya and Nigeria is
premature,” Al-Ghais said. “Data so far is showing that the real spike
in production only happened in June.”
The official added that output had increased on average by between
300,000 and 500,000 bpd from the two countries combined since the start
of the supply-cutting agreement in January 2017.
He said representatives from Libya and Nigeria had been invited to a
technical OPEC/non-OPEC committee meeting on July 22 ahead of the
ministerial gathering, to give presentations on production from both
countries.
“We have to look at the sustainability and stability of production
from those countries,” said Al-Ghais, who also heads the technical
committee. “We need to wait and see more production data before we can
make any decision.”
The technical committee could make recommendations on Nigeria and
Libya, which the ministerial committee would then review. The latter
cannot take production decisions but can make recommendations to OPEC
and other participating producers, which are scheduled to meet formally
in November.
Al-Ghais said that despite production increases from Libya and
Nigeria, there were signs of market rebalancing including U.S.
government data showing a large drop in stockpiles.
“We feel that the market is on the right way of correcting itself,”
he said. “Demand will pick up and we expect to see stronger demand in
the third quarter.”